Housing: "Drought of properly priced homes"

For now, inventories remain extremely tight in a majority of the nation's major housing markets. The Wall Street Journal's survey of quarterly housing-market conditions in 28 metro areas found that Phoenix, Seattle, Denver, and Sacramento, Calif., had less than a 2.5-month supply of homes for sale at the current sales pace. Dallas, Los Angeles, San Diego, Washington, D.C., and Orlando, Fla., had less than three months of supply, according to data compiled by John Burns Real Estate Consulting in Irvine, Calif.

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There are signs inventory declines will ease as price gains increase. In Sacramento, Calif., the number of homes for sale in June stood 7.5% above the level of a year ago, while inventories in Atlanta rose 9.7%. ...

In Orange County, Calif., inventories have increased 68% since March, standing roughly unchanged from year-ago levels at the end of June and reversing what had been a large year-over-year drop. Steven Thomas, a local housing analyst, says buyers are growing frustrated because sellers are getting greedy. "There is a drought of properly priced homes," he wrote in a recent report. Reports of rising home prices "have enticed a herd of homeowners to come on the market who all have thrown discretion out the door."

Angela Creech, a real-estate agent with Redfin in Irvine, Calif., says she's refused more listings in the past month because sellers are asking for too much money. "There are more really unrealistic sellers," she said.

I think we've seen the bottom for inventories in many areas, but many of the new listings are overpriced (no offer in the first 30 to 60 days suggests the property is overpriced).